Elder Bill Would Require Prompt Payment within Construction Industry

Legislation would encourage growth for small businesses, skilled trades

Wednesday, January 22, 2020

LANSING — State Rep. Brian Elder (D-Bay City) introduced House Bill 5375 on Tuesday to expand the prompt pay requirement within Michigan’s construction industry from just public construction projects to also include private projects. Contractors, sub-contractors and suppliers operating in the state often do not receive payment after completing approved work for months, or even years, stunting growth for small businesses looking to expand and invest in their companies.

“When high-quality projects are completed on schedule for approved work, there is no logical reason to allow significant payment delays to persist for their time, skilled efforts or materials,” said Elder. “While we currently require this for public projects, our private contractors and suppliers are being taken advantage of by this unscrupulous practice. Just like every other segment of our workforce, our small businesses, tradesmen and tradeswomen deserve to be paid in a timely matter for their work.”

Currently, all 50 states require prompt pay on public construction projects, but Michigan is one of only 16 states that do not require prompt payment for private construction projects.

“We must treat small businesses fairly in our state and allow them to pay their employees on time and invest in their company. This is also about paying our hard-working men and women in the construction industry on time like they deserve. House Bill 5375 is pro-business and pro-worker,” said Kevin Koehler, the President of the Construction Association of Michigan.

House Bill 5375 would require payments within 30 days following completion of accepted work. However, this legislation would continue to allow for the withholding of payment for unsatisfactory work, aligned with industry standards for both the public and private sectors.

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